As noted above, numerous software packages are advertised as providing some “Portfolio Management” functionality, but many of these systems focus on the accounting functions necessary to track transactions within an account, keeping the accounts in balance and generating reports reflecting gains and losses of the portfolio. Some systems include additional features such as contact management, financial planning functions and/or basic security analysis. Some systems may also allow model portfolios to be generated and compared against other models and/or the actual performance of the current portfolio.
Although some existing systems, particularly those that provide some financial planning functions, may also be able to generate portfolio return estimates. These systems, however, tend to rely on historical returns for each of the underlying investment classes without adjustment(s) incorporating short-term, forward-looking estimates of market performance that reflect new information. According, the results based on historical returns can diverge significantly from those returns that can reasonably be expected in the short-term and can, therefore, significantly understate or overstate the estimated return. As will be appreciated, neither result provides the necessary guidance to the investor or advisor.
Numerous systems exist in the prior art for determining when to sell a real investment, most of which are applied to short term investing and/or day trading. The most basic incarnation of these system are stop loss orders that are placed with a broker at the time an investment is bought. Although these systems have varying features, buyers typically place a fixed share price threshold that will trigger the sale of a particular investment to be sold. This share price threshold is usually, if not always, a single share price rather than a plurality of share prices coordinated with corresponding liquidation percentages. Some of these stop loss systems are automated through one or more computer programs that track the price of the target investment and initiate the selling trade when a dynamic share price threshold is broken by the downward movement in an investment's price. These systems are commonly referred to as trailing stop loss systems.
As will be appreciated, these fixed and trailing stop loss systems are generally inadequate for enabling long-term investors to reach their financial goals. For example, if a fixed stop loss was placed at $95 for an investment purchased at $100 per share, regardless of the increase in the share price the only automatically generated sale will result in a loss. A trailing stop loss system would improve upon this performance by, for example, utilizing a stop loss of $5 per share would tend to preserve some of the gains. As the investment increases in value, however, the trailing stop loss increment will represent a decreasing percentage of the investment share value and will tend to increase trades initiated by only minor perturbations of the investment value. Another type of stop loss system is found in U.S. Pat. No. 7,739,172 to Voudrie which incorporates a number of sell triggers and a number of liquidation percentages and allows for dynamic adjustment of the sell triggers based on current data including, for example, time sliced data on an investment's price retrieved a communication medium such as the Internet and used for automatically adjusting the triggers on a “real-time” basis.